Entertainment market is now three quarters digital, but physical formats dominate the year’s biggest hits

3 January 2018: Booming streaming services helped the entertainment market to another all-time-high of £7.537bn in 2018, according to preliminary data compiled by the Entertainment Retailers Association (ERA). But after a week dominated by news of High Street retailer HMV going into administration, new analysis shows physical formats are essential to deliver the biggest hits.

After a sixth successive year of growth for the UK entertainment market, driven by digital services from the likes of Spotify, Steam, Netflix, Amazon, Deezer, Sky, Apple and Google, digital revenues accounted for more than three-quarters (76.1%) of entertainment sales value in 2018, according to ERA figures.

On a market level digital revenues now dominate all three sectors, with digital generating 80.1% of games revenues, 72.3% of video and 71.3% of music.

But on a title level, ERA analysis shows physical disc sales are still crucial to deliver the biggest hits with sales of the Top 20 films to own of the year averaging 74.1% physical and the Top 20 albums of the year averaging 61% physical.

The biggest music and video hit of the year, Hollywood musical The Greatest Showman, sold nearly two-thirds of its combined 4.3m sales on CD, DVD and Blu-ray. The biggest-selling console game of the year, FIFA 19, sold 2.5m units, around 75% on physical formats.

ERA CEO Kim Bayley said, “On a market level these figures are a stunning testament to the investment and innovation of digital services who have transformed the fortunes of an entertainment industry many had thought was doomed by the internet and piracy. Significantly in this week of HMV’s news, however, the data shows that if you want a real mass market hit, you need the reach and convenience of physical formats.

“In music even today more people buy CDs than pay for streaming subscriptions and in video more homes have DVD players than subscribe to all the leading video services put together. The challenge for physical retailers is to tap into this huge market of occasional buyers.”

SVoD (Subscription video on demand): Online subscription streaming services such as Netflix and an allocation of Amazon Prime revenue. Now TV movies, entertainment & kids is also included within this, but sports is excluded)

ERA’s market figures provide a definitive overview of the UK entertainment market, aggregating data from respected market analysts including the Official Charts Company, GfK, Futuresource Consulting, GSD and IHS. Preliminary numbers will be updated and confirmed with the publication of the ERA Yearbook in March 2019.

Games now account for more than half of the entertainment market

The biggest winner in entertainment’s digital transformation has been the games sector. For the first time in 2018, ERA can report that games accounted for more than half of the entire UK entertainment market (51.3%). More than any other sector, games has benefitted from a proliferation of new services from direct to console downloads to mobile and social gaming.

The physical console and PC games market shrank slightly in 2018, down 2.8% to £769.9m, and digital growth was by recent standards a modest 12.5% to £3.094m, but the sheer scale of the games market is such that it was enough to make it bigger than video and music combined.

Now worth £3.864bn, the games market has – thanks to digital – more than doubled in value since 2007.

ERA CEO Kim Bayley said, “The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment. Despite being the youngest of our three sectors, it is now by far the biggest.”

THE UK’S BIGGEST SELLING CONSOLE GAMES 2018*

Position

Title

Company

Physical Unit Sales

1

FIFA 19

Electronic Arts

1,889,401

2

Red Dead Redemption 2

Take 2

1,757,212

3

Call Of Duty: Black Ops 4

Activision Blizzard

1,172,855

4

Marvel's Spider-Man

Sony Computer Ent.

676,621

5

Mario Kart 8 Deluxe

Nintendo

458,675

6

Far Cry 5

Ubisoft

434,133

7

Crash Bandicoot N.Sane Trilogy

Activision Blizzard

430,551

8

God Of War

Sony Computer Ent.

399,395

9

Forza Horizon 4

Microsoft

392,960

10

FIFA 18

Electronic Arts

351,788

11

Grand Theft Auto V

Take 2

339,805

12

Spyro Reignited Trilogy

Activision Blizzard

333,725

13

Battlefield V

Electronic Arts

313,100

14

Assassin's Creed Odyssey

Ubisoft

305,937

15

Super Smash Bros. Ultimate

Nintendo

284,155

16

Super Mario Odyssey

Nintendo

240,710

17

Call Of Duty: Wwii

Activision Blizzard

230,576

18

Pokemon: Let's Go, Pikachu!

Nintendo

227,767

19

Shadow Of The Tomb Raider

Square Enix / Microsoft

226,125

20

Fallout 76

Bethesda Softworks

218,534

Source: GfK/UKIE. * Digital games data not currently available

Video sees benefit of boom in downloads and streaming services

Downloads from Amazon, Apple and Sky Store and streaming services such as Netflix, Amazon Prime and Sky’s Now TV again proved the biggest news in video, driving digital revenues up 26% to £1.689bn.

This was in sharp contrast to the performance of DVD, down 23.5% in volume, and Blu-ray, down 11.9%. In value terms, with revenues of £2.338bn in 2018, the video business is now 7.4% above its 2012 low-point, but still well below its historic 2004 high of £2.953bn.

The best-selling film to own of 2018 was Hollywood musical The Greatest Showman, which sold 2.69m units, 71.3% of them on DVD or Blu-ray disc.

It topped a chart dominated by escapism and sci-fi fantasy and strongly oriented to physical formats.

ERA CEO Kim Bayley said, “Video was arguably entertainment’s most dynamic sector in 2018. Streaming services have transformed the viewing choices of the British public by offering 24/7 access and convenience. Meanwhile sales figures show the continuing loyalty of video consumers to DVD and Blu-ray, still the default choices for gift-buying and building a video collection.”

THE UK'S BIGGEST SELLING VIDEOS 2018

Position

Title

Corp. Group

Sales

% Digital

% Physical

1

The Greatest Showman

20th Century Fox

2,688,069

28.7%

71.3%

2

Avengers - Infinity War

Walt Disney

1,203,947

32.9%

67.1%

3

Mamma Mia - Here We Go Again

Universal Pictures

1,188,954

15.3%

84.7%

4

Star Wars - The Last Jedi

Walt Disney

1,155,736

15.0%

85.0%

5

Paddington 2

Elevation Sales

955,674

20.3%

79.7%

6

Peter Rabbit

Sony Pictures

899,271

30.0%

70.0%

7

Jumanji - Welcome To The Jungle

Sony Pictures

824,700

33.5%

66.5%

8

Black Panther

Walt Disney

813,979

19.6%

80.4%

9

Jurassic World - Fallen Kingdom

Universal Pictures

779,946

35.2%

64.8%

10

Thor - Ragnarok

Walt Disney

776,342

10.4%

89.6%

11

Deadpool 2

20th Century Fox

763,175

35.3%

64.7%

12

Solo - A Star Wars Story

Walt Disney

697,447

24.6%

75.4%

13

Darkest Hour

Universal Pictures

645,414

22.3%

77.7%

14

Kingsman - The Golden Circle

20th Century Fox

613,407

34.1%

65.9%

15

Blade Runner 2049

Sony Pictures

582,943

22.7%

77.3%

16

Justice League

Warner Home Video

579,381

33.2%

66.8%

17

Incredibles 2

Walt Disney

545,056

29.6%

70.4%

18

Coco

Walt Disney

536,486

28.7%

71.3%

19

It (2017)

Warner Home Video

456,086

26.5%

73.5%

20

Murder On The Orient Express

20th Century Fox

443,035

26.2%

73.8%

Source: Official Charts Company/BASE. Includes physical sales plus download to own

Music streams its way to success

Music registered its fourth successive year of growth in 2018 thanks to streaming with revenues generated by services like Spotify, Apple, Amazon, Deezer and Google/YouTube growing 37.7% to reach £829.1m.

The switch away from downloads continued with single track downloads down 25.5% over the year and album downloads down 26.3%.

Physical formats performed less well, with CD unit sales down another 23.1%. After a decade of growth, vinyl album sales grew just 1.6%.

The music sector is now 30% bigger than it was at its 2014 low-point of £1.03bn, but it is still well off its 2001 peak of £2.11bn.

The key trend in music in 2018 was the strength of original movie cast recordings. The biggest seller was The Greatest Showman with sales of 1.62m units and it was accompanied in the Top 10 by two other original movie cast recordings - Mamma Mia - Here We Go Again and A Star Is Born.

ERA CEO Kim Bayley said, “Streaming services were once again the star performers in the UK music market in 2018, but the continuing strength of physical sales at the top end of the chart means that unless you are a hip-hop artist, the only way to have a really big album is to generate CD sales as well as streams.”

THE UK’S BIGGEST ALBUMS 2018

Title

Artist

Total Units

Corp. Group

% Digital

% Physical

1

The Greatest Showman

Cast Recording

1,621,905

Warner

48.7%

51.3%

2

Staying At Tamara's

George Ezra

691,332

Sony

29.5%

70.5%

3

Divide

Ed Sheeran

510,305

Warner

59.1%

40.9%

4

Now That's What I Call Music 100

Various Artists

479,197

Sony/Universal

14.6%

85.4%

5

Now That's What I Call Music 99

Various Artists

395,237

Sony/Universal

16.9%

83.1%

6

Mamma Mia - Here We Go Again

Cast Recording

374,476

Universal

34.1%

65.9%

7

Scorpion

Drake

300,100

Universal

93.1%

6.9%

8

Now That's What I Call Music 101

Various Artists

287,217

Sony/Universal

7.2%

92.8%

9

Beerbongs & Bentleys

Post Malone

281,644

Universal

91.9%

8.1%

10

A Star Is Born

Cast Recording

271,635

Universal

35.9%

64.1%

11

Love

Michael Buble

263,538

Warner

6.7%

93.3%

12

Dua Lipa

Dua Lipa

251,280

Warner

65.1%

34.9%

13

Kamikaze

Eminem

232,420

Universal

71.6%

28.4%

14

Odyssey

Take That

231,290

Sony/Universal

7.1%

92.9%

15

Si

Andrea Bocelli

213,321

Universal

5.1%

94.9%

16

Bohemian Rhapsody - OST

Queen

210,306

Universal

35.2%

64.8%

17

Always In Between

Jess Glynne

204,923

Warner

28.2%

71.8%

18

Blood Red Roses

Rod Stewart

196,192

Universal

5.1%

94.9%

19

Sweetener

Ariana Grande

193,362

Universal

61.7%

38.3%

20

The Architect

Paloma Faith

179,716

Sony

22.9%

77.1%

Source: The Official Charts Company

The “Christmas from hell”

The structural challenges faced by physical retailers were compounded by a Christmas trading season worse than many entertainment retailers can remember.

In the week leading up to December 21, DVD sales were down 31.2% on the same week the previous year, Blu-ray sales were down 33.5% and CD sales were down 29.4%.

ERA CEO Kim Bayley said, “It was truly the Christmas from hell. High Street retailing is clearly suffering and that certainly impacted the entertainment business. It is a testament to the strength of the streaming revolution that despite it all, entertainment enjoyed its sixth consecutive year of growth.”

ERA members supply the sales data which powers the Official Charts Company (music and video charts) and GfK Chart-Track (videogames). Together with record companies trade association the BPI, it owns the Official Charts Company.

ERA provides the organisational force behind Record Store Day, the annual celebration of independent record stores which has become the most successful new music industry promotion of the past two decades.

ERA works closely with its sister organisations in music, video and games and is a strong proponent of open markets, open standards and consumer choice.